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1998 Supreme(Del) 977

High Court Of Delhi
BESTOCHEM FORMULATIONS - Appellant
Versus
DINESH AYURVEDIC AGENCIES - Respondent
Decided On : 11/24/1998

A suit filed by an unregistered firm is not maintainable under Section 69 of the Partnership Act, unless it falls within the exceptions provided in the proviso to the section.

Headnote:

PARTNERSHIP ACT - SECTION 69 - SUIT BY UNREGISTERED FIRM - MAINTAINABILITY - A suit filed by an unregistered firm is not maintainable under Section 69 of the Partnership Act, unless it falls within the exceptions provided in the proviso to the section.

Fact of the Case:

The plaintiff, an unregistered firm, filed a suit against the defendants for infringement of trademark, passing off, and rendition of accounts. The defendants filed an application under Order 7, Rule 11 of the Civil Procedure Code, seeking dismissal of the suit on the ground that it was barred under Section 69 of the Partnership Act.

Finding of the Court:

The court held that the suit was not maintainable as the plaintiff firm was unregistered on the date of filing the suit. The court found that the suit was based on a contract entered into by the plaintiff as a partner of an unregistered firm, and thus fell within the ambit of Section 69 of the Partnership Act. The court also held that the subsequent registration of the firm and the deletion of one of the defendants from the array of parties did not make the suit maintainable.

Issues: Whether a suit filed by an unregistered firm is maintainable under Section 69 of the Partnership Act.

Ratio Decidendi: Section 69 of the Partnership Act bars suits by unregistered firms, except for suits for enforcement of rights or powers to realize the property of the dissolved firm, or for rendition of accounts of the dissolved firm. The suit in the present case was not for any of these purposes, and thus was not maintainable.

Final Decision: The court dismissed the suit as it was not maintainable under Section 69 of the Partnership Act.

M. K. Sharma

( 1 ) THE present suit has been instituted by the plaintiff against the defendants seeking for a permanent injunction restraining the defendants from passing ott of the trade mark of the plaintiff as also the copyright of the plaintiff and also for rendition ot accounts.

( 2 ) THE defendant No. 2 filed an application under Order 7, Rule 11, Civil Procedure Code praying for rejection of the plaint on various grounds raised in the application. One of the grounds taken in the said application is that the present suit is barred under Section 69 of the Partnership Act. The defendants have stated that on the date when the present suit was filed by the plaintiff, the plaintiff was an unregistered firm and since no suit could be instituted by a partnership firm linless the firm is registered and the person suing is shown in the Register of Finns as a partner in the firm, the suit is barred and, therefore, is liable to be dismissed on that count alone. It is, however, necessary to mention that apart from the aforesaid ground several other ground shave been raised by the defend ants in the a foresaid application seeking for rejection of the plaint.

( 3 ) HOWEVER, at the time of arguments, the learned Counsel for defendant No. 2 stated that except for the ground taken by the defendant No. 2 for dismissal of the suit on the ground of non-registration of the plaintiff firm, the other grounds taken in the said application could be agitated also during the trial and, therefore, the said grounds are not pressed at this stage. In view of the aforesaid statement made by the Counsel for the defendants, the said present application under Order 7, Rule 11, CI c is considered only for the purpose of deciding as to whether the suit is barred under the provisions of Section W of the partnership Act and the defendant No. 2 is given the liberty to raise the other grounds at a subsequent stage, if the suit survives and continued. Therefore, the scope of the present application is restricted only to the extent of the objection taken by the defendants that the suit is not maintainable and is liable to be dismissed in view of the provisions of Section W of the Indian Partnership Act, as on the date of filing of the suit, the plaintiff was not a registered firm.

( 4 ) COUNSEL for the defendants drew my attention to the statement made by the plaintiff in paragraph I of the plaint contending, inter alia that the plaintiff is a registered firm. The aforesaid statement on the face of it appears to be a mis-statement, inasmuch as, it is an admitted position that on the date of filing of the suit, the plain tiff was an unregistered firm and obtained registration of the firm subsequent to the filing of the present suit. The documents placed on record clearly corroborate and prove and establish the aforesaid fact.

( 5 ). The plaintiff firm was originally registered on 25. 7. 1983, but, was subsecuently dissolved before February, 1995 and thereafter on 7. 2. 1995, Shri Girish Kumar Juneja and Shri Vijay Kumar formed a new partnership who applied for its registration on 23. 9. 1w5. In pursuance ot the aforesaid application, the firm was registered on 2. 12. 1997 and as such on the date of institution of the suit in. Fuly, 1997, the firm was unregistered. The Counsel appearing for the plaintiff could not, but, admit the aforesaid position in view of the existence of several other documents on record. I also find on record that subsequently the plaintiff also sought for amendment of the plaint on that count and the same was also granted. Thus, it is to be seen and considered as to whether the present suit instituted by an unregistered firm is maintainable or not. Section 69 of the Partnership Act is relevant for the purpose and all the Clauses thereof are extracted here in below for proper appreciation of the issue in question:

"69 Effect of the- registration- (1 ) No suit to enforce a right arising from a contract or conferred by this Act shall be institute








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